Friday, April 3, 2015

Baker Yells "Cut!"

"Baker seeks to end film credit, boost working families" by Akilah Johnson, Globe Staff March 03, 2015

Governor Charlie Baker is proposing that the state kill a controversial tax credit for the film industry and expand one for thousands of low-income workers.

Baker’s proposed state budget, to be released Wednesday, will call for doubling the state’s Earned Income Tax Credit, which currently adds as much as $937 to the tax returns of low-income working families with three or more children. Within three years, that figure would increase to $1,873.

To pay for it, Baker calls for phasing out the state’s film tax credit.

“I think it’s an important opportunity for us to both do something real and also send a signal that we believe in supporting people who are working real hard to get ahead,” the governor said in an interview Monday. “This is one way, in addition to increasing the minimum wage and some others, to provide them with more bang for their buck.”

The film tax credit, with some exceptions, pays for 25 percent of wages and production expenses for films, commercials, and TV shows shot in Massachusetts. Those productions also do not have to pay sales taxes. It has long had critics who say its costs outweigh the benefits to the Massachusetts economy.I'm one, especially when the tax loot is going to profitable in$titutions.

According to a report by the state Department of Revenue, the state gave the film industry $80 million in tax credits in 2012 — the most recent year for which figures are available — but the savings generated by those credits were felt mostly outside the state.Imagine what your city could have done with that money.

Baker, echoing that criticism, said he doubted the importance of the film tax credit.

“I think it’s hard to conclude from the reports that I’ve read that [the film tax credit] is the most fundamental piece of why someone chooses to make a film here,” he said.

Baker said he sees the two tax proposals — assuming the Democrat-dominated Legislature goes along with them — as making good on campaign promises to expand a tax credit to some of the state’s most vulnerable workers while also simplifying the overall tax code.They are not, and he's okay with that.

And at least one aspect of Baker’s proposal appears to have the support of Senate President Stan Rosenberg, who called for updating the state’s Earned Income Tax Credit in his inaugural address.

“The Senate will welcome Governor Baker’s attempts to change it and to reward even more people whose hard work often leaves them [with] little to show for it,” Rosenberg said at the time.

But state budget watchers wonder whether the Legislature would endorse Baker’s priorities. Instead, they suggested, lawmakers might split their support for Baker’s plan, green-lighting the increase in tax breaks to low-income workers while protecting those for the film industry. His Democratic predecessor, Deval Patrick, tried to cap the film-industry credits several times, only to have lawmakers beat back his efforts.Related:

The tax credit has been cited by supporters for encouraging a number of films in Massachusetts.

In 2012, the tax credit supported 118 projects, but the overwhelming majority of the credits — $60.1 million — went to just three feature films, according to a state Department of Revenue report. One of the three, “R.I.P.D.,” starring Jeff Bridges, received $26.6 million in state financing but did poorly at the box office, according to a Globe article about the report.

The other two movies — “Grown Ups 2,” which received $24.2 million, and “The Heat,” which received $9.3 million — were profitable, the Globe reported.

Robin Dawson, executive director of the Boston Film Festival, wrote in a Nov. 16 Globe op-ed column that tax breaks and incentives, like the ones given in New York and California, can become the deciding factor in a film studio’s choice of location.Then let them go somewhere else.

“It may also be time to boost Massachusetts’ film tax credit,” she wrote. “The current tax incentive is directly linked to securing continual film and television production and is a requirement in order to keep the industry one that is lucrative for all involved.”These people are just grabbing as much loot as they can!

Instead of giving that money to the film industry, however, Baker proposes using it to fund the increase in the Earned Income Tax Credit, and while redirecting the funds from the film credit would pay for most of the increase in the tax credit for low-wage workers, the state will be responsible for finding an additional $65 million to reach full implementation by 2019.How dare he give Hollywood's money to poor people!

Noah Berger, president of the liberal-leaning Massachusetts Budget and Policy Center, which has been critical of the film tax credit, said research shows the Earned Income Tax Credit is “a very effective way” of helping families who are struggling financially to make ends meet.

“It’s certainly not going to solve all the problems that low-wage workers face, but it’s a significant increase in income that has a positive effect in helping parents pay the rent, pay for food for their kids, and support their families,” Berger said.

The increase, he said, is “a meaningful step forward.”May have to rewind the tape.

That’s what film industry insiders and union officials warn Massachusetts will become if legislators sign off on Governor Charlie Baker’s plan to ax the state’s film tax credit program in favor of expanding tax credits for low-income workers.

“Gone,” said Sam Weisman, a longtime Massachusetts-based producer and director, of the state’s burgeoning film industry. “Not only is it gone, but the minute news hits the West Coast, anyone who was thinking about coming here in the summer is not going to come.”Fine. I'll be able to get home then.

It’s a bleak prospect for an industry that has seen strong growth in the decade since Massachusetts implemented the program, a controversial measure that offers productions spending more than $50,000 a 25 percent tax credit to defray costs associated with paying actors, building sets, and other production expenses.You picked up Tom Cruises salary for them.

Major films ranging from “The Judge” to “American Hustle,” “Labor Day,” “Ted,” “The Town,” “The Social Network,” and “The Fighter” and such TV shows as “Wahlburgers” and “Top Chef: Boston” have all done filming in Massachusetts during that span.

“This will have a devastating effect on the film industry in Massachusetts, because the tax credit is the reason film production companies come to shoot here,” said Susan Nelson, executive director of the New England chapter of SAG-AFTRA, a union that represents actors and other media personnel. “This will deeply affect our members. Anyone who’s making a film or TV show, they’re all looking at the numbers, and if we don’t offer the credits, they will go elsewhere.”Bye.

The Massachusetts film tax credit program competes with nearly 40 such incentive programs across the country, and supporters say it’s working: The state granted tax credits to 15 feature films in 2012, up from seven in 2006, and total production spending on film, television, and commercials eligible for the tax credit was $315.8 million, up from $86.1 million in 2006, according to a state Department of Revenue report.

Supporters of the film tax credit say the governor’s plan would jeopardize thousands of good jobs in the state.

“Working families don’t need to be hurt to help working families,” Chris O’Donnell, business manager for the film crew union IATSE Local 481, said via e-mail.I'm tired of $elf-$erving $h**s, sorry.

Vans Stevenson, senior vice president of state government affairs for the Motion Picture Association of America, said “Massachusetts could lose up to 10,247 direct jobs,” according to MPAA research. “The Massachusetts incentive program has been around for a while now and has developed a crew base of theatrical and stage employees. That represents a payroll of $544.8 million in wages.”

Supporters say that Baker’s proposal also threatens some local businesses. “Major players from Hollywood are scheduled to visit here in the next few weeks as they decide on locations,” said Justine Griffin, spokesperson for New England Studios, a large film and TV production facility in Devens. “Even the specter of the repeal could send them elsewhere.”

Last year, the recently opened facility played host to the cast and crew of “Tumbledown,” an independent film starring Jason Sudeikis. “We wouldn’t have gone there without the tax credit,” said Margot Hand, one of the film’s producers. “It would have been a non-starter.”

But state government officials say the program, which paid an estimated $77.8 million in tax credits in 2013, often goes to pay the outsized salaries of Hollywood stars. What’s more, around two-thirds of the production spending linked to the tax credit went out of state in 2012, according to the DOR report.Related: Massachusetts Lets Hollywood Roll CreditsThey SOLD 96% of them?

“The vast majority of the credits go to taxpayers who are out of state,” said Paul McMorrow, director of policy and communications at the state’s Executive Office of Housing and Economic Development, which oversees the Massachusetts Film Office. “If we’re looking for local economic impact, those funds will be better used if you put them in the hand of local working families.”They rolled 'em right out state, huh?

McMorrow said the film tax credit program’s meager returns to Massachusetts don’t justify its cost to taxpayers. “The numbers are pretty stark: of the 2,000 jobs created, only 700 went to Massachusetts residents,” said McMorrow, who added that each job created cost the state $108,000. “You have an $80 million program that only creates 700 jobs. There’s got to be a better way.”Tell it to the Legi$lature!

Baker’s proposed budget, released Wednesday, would phase out the state’s film tax credit program, diverting those funds to the Earned Income Tax Credit, which he hopes to increase to $1,873 for low-income families with three or more children.

“Increasing the Earned Income Tax Credit is a very good use of those funds. That’s something that directly raises the wages of 400,000 people in Massachusetts,” said Noah Berger, president of the Massachusetts Budget and Policy Center. “Paying a star’s salary isn’t a very good way of helping the Massachusetts economy.”

But supporters of the film tax credit say it also helps support thousands of ancillary businesses not directly tied to film production — everything from restaurants and dry cleaners to lumber yards and electricians.

“They pay millions for hotel rooms, they eat thousands of meals – that commerce would not exist were it not for the tax credit. Nothing would come here,” said Weisman, who added that the state’s film industry acts a driver for tourism. “It’s all part of an anti-union festival that’s going on all around the country: When in doubt, let’s go after workers that are actually making a living.”Yup.

It’s a viewpoint shared by Speaker of the House Robert DeLeo. “I’ve seen firsthand what it has meant in terms of the local economy, things that I don’t think are even looked upon when you consider the film tax credit,” said DeLeo, describing a speech he gave at the Chelsea Chamber of Commerce. “We had a genetlemen there who rents furniture. We had a florist. We had a small little delicatessen. All of which were telling me what that film tax credit meant to them. I don’t think those are considered as some of the beneficiaries.”

Many now fear that will all go away if Baker’s budget is approved.Don't worry, it won't be.

Count among them Dennis Lehane, whose novels “Gone, Baby, Gone” and “Shutter Island” were adapted into films here since the credit was established. “All I can say is that before the tax credit there were, if memory serves, just about no movies being made” in Massachusetts, Lehane said via e-mail. “But if the guv’ wants Hollywood to go back to ‘faking’ Boston in Montreal and Toronto, I guess that’s his choice. Not one I agree with, but then I’m not a politician.”Dennis Lehane’s ‘World Gone By’ is a killer

The Massachusetts film tax credit has created hundreds of jobs and helped finance a string of hit movies, from “Moneyball,” the true-life story of a data-driven baseball executive, to “Ted,” a raunchy comedy about a man and his teddy bear.Yeah, it's all good.

So Governor Charlie Baker raised some eyebrows a few weeks back when he proposed phasing out the program.

But the governor, it turns out, is no outlier. Around the country, a growing number of elected officials and independent analysts are souring on film incentives.

It has become too expensive, they say, to bring tinsel to town.

In Maryland, where the Netflix series “House of Cards” is shot, a recent report by the legislature’s nonpartisan staff found that for every dollar in film incentives the state doles out, it gets back only 10 cents in state and local tax revenue.

In Louisiana, known as “Hollywood South” for the size of its entertainment industry, a new study commissioned by the state’s economic development department says taxpayers lost as much as $184 million on film tax credits last year.

In the fall, Nevada shifted most of the money from its film incentives program into a package of tax breaks for electric carmaker Tesla. And Michigan and North Carolina have substantially scaled back their credits.

“They’re a colossal waste of money,” said Paul Stam, the Republican speaker pro tempore in North Carolina’s House of Representatives. “We were sending big checks to Hollywood producers and rich guys out of state.”That is the purpo$e of government, if you haven't noticed.

The trend is not universal. New York extended its program a couple years ago. California recently tripled its annual film and television tax credit program to $330 million in a bid to recapture business lost to other states.The home of Hollywood and they have to give them more money! I wonder how much water that would buy.

And while a number of states are trimming back, 37 still have incentive programs on the books, according to the latest tally by Ease, a Los Angeles-based firm that provides the entertainment industry with payroll services and help navigating tax credits.

States subsidize up to 30 percent of production costs with tax credits. And Hollywood has taken to shopping around for the best deal. All the states combined spend about $1.5 billion per year on the bidding war.

Supporters say the investment is worth it.

Movies and television are good for tourism, they argue. Hundreds descend on Lake Lure, N.C., for the annual “Dirty Dancing” festival. And the Iowa ballfield from “Field of Dreams” is still a draw.

Film tax credits have also encouraged an entertainment infrastructure in some unlikely locales. Two years ago, the $40 million New England Studios opened on the former Fort Devens base west of Boston.

Productions also yield all manner of spin-off spending, with crews dropping thousands of dollars on hotels, caterers, and dry cleaners.

“If these programs were not working — not producing jobs, not producing investments — they would be eliminated,” said Vans Stevenson, senior vice president of state government affairs for the Motion Picture Association of America.

But critics say the work is temporary and the tourism impact difficult to measure. And there is little reason to believe local film industries will stand on their own any time soon, they argue: It is the incentives themselves, not the studios or talent they have spawned, that keep the stars coming.

“In reality, as soon as the state pares back the incentives, the industry leaves,” said Joe Henchman, a vice president at the right-leaning Tax Foundation and a prominent critic of film incentives.

“House of Cards” took a stick-then-carrot approach last year when Maryland lawmakers were considering reductions.

First the show threatened to leave. Then producers deployed actor Kevin Spacey to an Annapolis wine bar to woo legislators with handshakes, a punchy speech, and a drink called “The Frank,” named after his character Frank Underwood.

Governor Martin O’Malley, a Democrat, ultimately signed a package of tax breaks that kept the show in the state.

It is Republican governors and lawmakers who have been at the forefront of the push to roll back tax credits nationwide.

And conservative billionaire brothers Charles G. and David H. Koch have joined the fight of late — airing radio advertisements in North Carolina warning against “Hollywood handouts,” sending mailers to Florida voters, and dispatching a lobbyist to the Montana Legislature.

David Farber, a history professor at Temple University and author of “The Rise and Fall of Modern American Conservatism: A Short History,” said a generally liberal film industry makes for an attractive target for Republicans.

But he said the opposition to film tax credits is part of a broader strain of conservatism bent on dismantling a “crony capitalism” that favors some interests over others and replacing it with a “cleaner free market.”

In Michigan, Republican Governor Rick Snyder has labeled film incentives and other targeted tax credits the “heroin drip” of government.

But if conservative ideology has played a role, analysts say, the paring back of film incentives is largely driven by state budget woes and the sprouting of critical research from analysts on both the left and right.

“The ideological horseshoe effect is in play here,” said Robert Tannenwald, an economist who wrote a report critical of film tax credits for the left-leaning Center on Budget and Policy Priorities. “People who adhere to liberal or conservative fiscal priorities come together . . . [to oppose] subsidies that are focused on a narrow industry.”

Some Democrats have moved to restrain film tax credits. Former Massachusetts governor Deval Patrick tried unsuccessfully to cap the program. In Connecticut, Democratic lawmakers have scaled back incentives, incurring the ire of child star-turned-director Ron Howard, who called it a “horrible mistake.”Screw you, Richie!

The scramble for film and television business began in earnest in 2002, when Louisiana ramped up its existing incentives program and New Mexico passed one of its own.

Over the next seven years, dozens of states followed suit — some of them quite creative. In West Virginia, officials offered a program called “River on Demand”: With a little help from the US Army Corps of Engineers, filmmakers could choose between “raging whitewater” and something more serene.

The Massachusetts incentives, put in place in 2006 and altered a year later, are more typical. The state covers 25 percent of production and salary costs, with some exceptions, and offers a sales tax reprieve on many purchases.

The program is widely credited with bringing a series of big-budget productions to the state — from “The Fighter” to “American Hustle.” But annual reports from the state’s Department of Revenue have cast doubt on the value of the breaks.

In 2012, the last year for which data are available, more than half of the money spent on production costs went to out-of-state firms, according to the department, and three-quarters of wages went to nonresidents.

The average state subsidy per Massachusetts job between 2006 and 2012: $118,873.

Baker has proposed using the money from phased-out incentives to double the state’s earned income tax credit, which benefits thousands of low-income working families. “For me, budgets and policies are about choices,” the governor said in a recent interview. “I view [the earned income tax credit] as a better choice.”

The pairing of the two policies has made the politics tricky for Democratic lawmakers who favor both. Some have called for separate consideration of the proposals. And they insist the film incentives are a success.

“It seems to me kind of crazy to take a credit that’s working and scuttle it,” said House majority leader Ronald Mariano, a Quincy Democrat.

Mariano and other supporters have criticized the Department of Revenue’s methodology and pointed to industry research that takes a more favorable view. A Motion Picture Association of America report from 2013 found that every dollar in credits awarded by the state led to $10 of spending in Massachusetts.

Film industry workers have sent hundreds of e-mails to lawmakers, some of them via savemafilmjobs.com, launched in recent weeks by set lighting technician Geoffrey Eads of Medford and his wife, a photographer who does not work in the industry.

The website is filled with the testimonials of local actors, set decorators, and food stylists trumpeting the economic benefits of film production and raising alarms about the governor’s proposal.

“Everyone is really apprehensive,” Eads said.

He puts himself in that camp, saying the uncertainty surrounding the film tax credit is scrambling his family’s plans. “We were going to move to a bigger house and a better school system,” Eads said. “But we don’t know if we’re going to do that now.”

The gravitational pull of the stars is surprisingly magnetic, strongly intoxicating. Faster than you can say Jennifer Lawrence, serious-minded people get all rubber-legged.

I’ve seen it up close. When big-name Hollywood actors make the occasional visit to the Globe, reporters capable of putting the toughest of questions to the most powerful of politicians can melt like tittering teenagers.

Newton native John Krasinski, of “The Office’’ fame, stopped by a few years ago and I thought I’d have to finally learn how to use one of the portable machines that shocks the heart back into normal rhythm.

The entire town of Plymouth fell under the spell of “moguls” who promised to bring Hollywood East to the woods of the South Shore in 2009. That spell was broken after our Spotlight Team reported that their supposedly solid financier was a con man, a faker who now resides in a federal prison in North Carolina.

I bring up the stars-in-our-eyes factor now because there’s a renewed and real debate underway about whether to kill the multi-million dollar handout Massachusetts taxpayers give to Hollywood production companies every year, in the form of a bogus tax credit that no longer makes sense if it ever did.

“It’s a bad thing for taxpayers,’’ Governor Charlie Baker’s chief economic development officer, Jay Ash, told me this week. “It’s a tax loser. This is not a hard choice for us. Why would we perpetuate something that’s losing the state money?’’

That’s a good question and one that will be the focus of intense debate as budget writers at Beacon Hill consider how to dig themselves out of a $1.8 billion hole. This tax credit should be tossed out when the first shovel hits the ground.

Think tanks across the political spectrum have assailed the tax break as a giveaway that has never lived up to its promise. Simply put, the film tax credit pays for 25 percent of wage and production expenses, in exchange for promised jobs and revenue.

The calculus is bleak. Since its inception in 2006, the administration says taxpayers have lost $169 million. The state Department of Revenue said that deal cost the state $78.9 million in 2012, the latest year figures are available. Most of the economic benefits — and most of the jobs created — went out of state, the department said.

I spoke with an official at the Motion Picture Association of America Friday who predicted a nuclear winter for the Massachusetts film industry if the tax credit is killed. And he questioned the methodology of the bipartisan economic reports which pronounce it a boondoggle.

Let’s see. Democratic and Republican administrations have called it a dog, as have independent analysts. But Hollywood now says it has crunched its own numbers only to find that it’s the best thing since sliced bread. Gee. I’m so star-struck that I don’t know what to say except: I’m ready for my close-up, Mr. DeMille.

There are real jobs at stake here. I don’t dismiss or diminish that. If this were a time of plenty, fine. But this is wasting money when there’s no money left to waste.

Baker wants to use the money saved by killing the film tax credit to help put more money into the hands of low-income working families. That’s good politics, but the tax credit should rise or fall on its own and, considering competing needs, it should fall.

Just ask Linda Spears, the new commissioner of the Department of Children and Families, what she could do with an extra $80 million a year. She’ll likely start salivating.

All of this seems like an easy choice to me. But House Speaker Bob DeLeo, Beacon Hill’s self-appointed indispensable man, wants to keep this subsidy. Seems he’s talked to the owners of some sandwich shops which sell lots of Italian grinders whenever Tom Cruise comes to town.

Look, I like those telescopic photos of Ms. Lawrence and co-star Bradley Cooper alighting from their trailers on the set in North Reading as much as anybody.

Fittingly, there’s a bit of theatrics to Baker’s recommendation, which he is expected to unveil Wednesday as part of his budget proposal. As a policy matter, lawmakers should evaluate the two ideas — ending the film program and expanding the earned-income credit for low-income families — on their own merits. But as a political matter, linking the two does put film boosters on the defensive, and forces the Legislature to justify spending $80 million a year on movies in the context of a gaping budget deficit and other pressing needs.

Since 2006, when the credit was created, the state has spent hundreds of millions of dollars financing movies filmed in Massachusetts. The idea was to aid the local movie industry and make the state more hospitable to artists, while at the same time reaping the intangible benefits of showcasing the state on the silver screen. That vision won widespread support — including from this editorial page.

But the evidence of the last nine years just hasn’t vindicated those hopes. As an economic development program, the film tax credit has proved extraordinarily inefficient. Report after report has shown that the number of jobs created is small, and that much of the money flows to out-of-state movie stars. The program has attracted criticism from across the political spectrum, from left-leaning groups, like the Massachusetts Budget and Policy Center, to the business-funded Massachusetts Taxpayers Foundation. It’s true that some artists benefit, but it’s hardly fair to shovel millions into one sector — one that already has access to plenty of private capital — while poets, musicians, and other Massachusetts artists get table scraps.

One local group that has clearly benefited, though, is the Teamsters, whose members often work on sets. Prior to the credit, many filmmakers had avoided Massachusetts because of the cost and hassle of working with the union. But rather than influencing the union to lower its prices or end its occasionally heavy-handed ways, the creation of the film credit seems to have allowed it to avoid reform and, instead, simply pass their inflated costs on to the public.

And what about the much-vaunted reputational benefits? Whether “Paul Blart: Mall Cop” has added to the prestige of Burlington, for instance, will always remain in the eye of the beholder. Still, based on the movies that have been filmed here, a convincing case could be made that the credit has subsidized too many movies that tell an outdated story about Massachusetts. Hollywood loves Boston thugs, and has used taxpayer money to film “The Town” and the forthcoming “Black Mass,” among other crime flicks. The very image modern Massachusetts should by trying to shake off is the one producers seem intent on reinforcing for the rest of the world.

That was the chance the Commonwealth took when it decided to dangle money in front of producers in order to build a local film industry. It hasn’t paid off. With so many better uses of public money calling, the state would be justified in cutting its losses.

"Good riddance to the Mass. film tax credit" by Joan Vennochi, Globe Columnist March 08, 2015

What? No more Jennifer Lawrence sightings if the film tax credit is eliminated, if the film credit is gone?

The film crews that took over prime downtown parking spots never delivered the jobs and revenue promised by tax credit proponents, but unlike other star-struck politicians, Governor Charlie Baker apparently sees through the veneer. He wants to end the film program and expand the earned-income-credit for low income families. Imagine helping poor people instead of pampered, overpaid movie stars? It’s good politics, but also good policy. In that quest, Baker has the blessing of Michael J. Widmer, the outgoing president of the Massachusetts Taxpayers Foundation, who during his farewell gala speech took time to declare, “By the way, Charlie, I strongly agree with that proposal.”

Still, pulling the plug on Hollywood won’t be easy.

The pressure to let the movie industry have its way with Boston began in 2005, when actor and Oscar winner Matt Damon said his home state was losing out on millions of dollars in revenue because Massachusetts offered no incentives. “Entertainment-wise, we’re like Third World on the state level. We just don’t get it,” Damon said at the time. That November, Governor Mitt Romney signed a new law making movie and television production companies eligible for sales, income, and corporate excise tax credits. In 2007, Governor Deval Patrick approved legislation that expanded the film tax credit. He tried to put the brakes on Hollywood in subsequent years; in 2013, he proposed capping the film tax credit at $40 million. But the House rejected his proposal, likely responding more to the desires of the Teamsters, who work on sets, than to the production companies who hire them.

Baker will be running up against that resistance too. Promoters of this blatant, state-run bribery program always put a Hollywood glow on any downside.

Movie and television directors did flock to the Bay State, and Cameron Diaz sightings multiplied. But the state lost millions in tax revenue and never saw promised permanent job growth. The Globe reported that in 2012 the state’s film tax credit cost Massachusetts $78.9 million. According to a review by the state Department of Revenue, most of the economic benefits of local film production went out of state. Only about one-third of the $304 million in spending generated by the tax credit was spent in Massachusetts; and of nearly 2,000 jobs created by the tax credit, only about one-third went to Massachusetts residents, the DOR report found.

Yet film tax credit promoters still pushed a demonstrably bad product. “Developing a viable, sustainable film, television, and media industry takes time,” declared Lisa Strout, the director of the Massachusetts State Film Office. According to Commonwealth Magazine, which has rigorously covered the issue, the film tax credit has not done much to build a stand-alone film industry here, although some gains are connected to the construction of New England Studios at Fort Devens.

Since some 35 other states have similar credits, supporters also argue that the business will fade to black if Massachusetts subsidies are dropped.

"House members back film credit; Dispute is their first with Baker" by David Scharfenberg, Globe Staff April 03, 2015

Governor Charlie Baker’s plan to end the state’s controversial film tax credit is facing mounting opposition in the House of Representatives, marking the Democrat-controlled Legislature’s first significant break with the Republican governor.

A vocal group of rank-and-file representatives has joined Speaker Robert A. DeLeo and majority leader Ronald Mariano in criticizing the governor’s push to end the nine-year-old credit, established to attract movie makers to Massachusetts.

Baker has proposed taking the money saved in a film tax credit phaseout and using it to help fund a doubling of the state’s earned income tax credit, which benefits hundreds of thousands of low-income workers.

“It’s designed to make it look like the working poor against movie stars,” said Representative Cory Atkins, a Concord Democrat who co-chairs the Joint Committee on Tourism, Arts and Cultural Development. She argues that local lighting technicians and hairdressers who work on movies would be the real losers if the governor got his way.

“It’s cute,” Atkins said, of Baker’s pairing of the two policies. “And when you say ‘cute’ in politics, it’s not a compliment.”

The governor, in an acknowledgment of the opposition in the House, has backed off somewhat — signaling he is open to an alternative means of funding the earned income tax credit expansion.

“If the Legislature chooses to pay for it through some other mechanism, that we’re OK with, I don’t have a problem with that,” he said, during a recent appearance on WGBH-FM radio.

But even as he retreats on the film incentives, Baker’s high-profile push for increasing the earned income tax credit has helped focus attention on that idea.OH!

A hearing of the Joint Committee on Revenue this week saw a contentious debate on the film tax credit proposal, but near-universal support for growing the earned income tax credit, or EITC.

****************

The state anticipates spending $136 million on the earned income tax credit in the fiscal year that begins July 1. That figure would swell to an estimated $290 million over the next three years if the governor’s proposal passes.

A working family with three or more children would see a tax credit as high as $937 increase to $1,873 over the course of three years.

Phasing out the film incentives, which cost about $80 million per year, would not cover the full expense. And without the movie money, expanding the earned income tax credit could be even tougher.

The state is staring down a $1.8 billion budget shortfall. And the governor and House speaker have promised not to raise taxes. But lawmakers say they will try to find the money.Yeah, $crew you, fellow citizens of Ma$$achu$etts.

The debate over the film tax credit comes amid a national reconsideration of the value of movie and television breaks. North Carolina, Michigan, and New Jersey have reined in their programs in recent years.

And in the fall, Nevada shifted most of the money from its film incentives program into a package of tax breaks for electric carmaker Tesla.That will drive itself.

The Massachusetts film tax credit covers 25 percent of production costs and salaries, with some exceptions. It also provides a sales tax exemption on many purchases.But it's worth it!

The state’s Department of Revenue has published annual analyses raising questions about the incentives’ worth. The most recent report found that, between 2006 and 2012, the average annual state subsidy per Massachusetts film industry job was $118,873.

Former governor Deval Patrick’s attempts to cap the film tax credit floundered in the face of lobbying by the local film industry. And Baker is facing similar resistance. Unionized set dressers, grips, and drivers have flooded the Legislature with hundreds of phone calls and e-mails. And there have been personal appeals, too.

Representative Timothy J. Toomey, a Cambridge Democrat who serves on the joint revenue committee, said he was recently approached at church by two women urging him to keep the film tax credits in place — one who works as an extra in movies and the other a mother of two workers in the industry.Pfffft!

Toomey, who backs the incentives program, said he’s also seen on-the-ground benefits. Last year, the producers of “Black Mass,” a film about gangster James “Whitey” Bulger, paid for the privilege of turning the Polish-American Club in his district into a replica of “Triple O’s Lounge,” the South Boston dive bar where Bulger held court.

“A lot of the neighbors walked down to watch,” he said. “It creates a little excitement.”Now open your wallet.

Lawmakers say there is no organized opposition to the film tax credit to serve as a counterweight to the industry.Because it is mostly everyone!

But they note that Massachusetts think tanks across the ideological spectrum, from the left-leaning Massachusetts Budget and Policy Center to the business-backed Massachusetts Taxpayers Foundation, have been critical of the program.

The Democratic co-chairmen of the revenue committee, Representative Jay R. Kaufman of Lexington and Senator Michael J. Rodrigues of Westport, say they need to dig further into the numbers before making a recommendation on Baker’s proposal.

But both have suggested they are skeptical of the film tax credit’s value and supportive of an earned income tax credit expansion. And that view, lawmakers say, appears to have traction in the generally liberal state Senate.

Legislators say they could do something short of a repeal of the film tax credits — tightening incentives rules, for instance, to direct more of the benefits to in-state workers and less to Hollywood talent.And yet they can tear open collectively bargained agreements.

But Representative Tackey Chan, a Quincy Democrat and active member of the Screen Actors Guild-American Federation of Television and Radio Artists who worked as an extra in “The Pink Panther 2,” said mainstream House members want to keep the fundamentals of the film incentives in place.

“The far left and the far right don’t like it,” he said. “The rest of us middle people — I’m a moderate kind of guy — like it.”!!!!!

"The owner of the Mystic Pizza restaurant made famous in a 1988 film with Julia Roberts has pleaded guilty to federal tax charges. Prosecutors say that in 2006-10 John Zelepos, 48, of North Stonington, Conn., diverted just over $567,000 from Mystic Pizza’s gross receipts into his personal bank accounts and those of family members. They say he then filed false tax returns to hide the income. He faces up to 15 years in prison."

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